What's In The Cards For JA Solar (JASO) In Q2 Earnings?

Solar company, JA Solar Holdings Company Ltd. (NASDAQ:JASO) is set to release second-quarter results before the opening bell on Aug 22.

Last quarter, the company delivered a positive earnings surprise of 250%. Also, JA Solar was able to beat the Zacks Consensus Estimate in three of the trailing four quarters, with an average positive surprise of 525.21%.

Let’s see how things are shaping up prior to this announcement.

Factors at Play

During the first-quarter earnings call, JA Solar said that it expects strong demand from China in the second quarter driven by accelerated activity in subsidy reductions. It anticipated that China will connect around 2 gigawatt during the reported quarter.

Additionally, the company said that for the second quarter it expects the total cell and the module shipments to be in the range of 1,550–1,650 megawatt, most of which will be external sales. However, it also mentioned that JA Solar doesn’t expect gross margin to improve in the quarter and projects to remain flat compared to the previous quarter.

Again, apart from the anti-dumping policies in the U.S. and Europe, JA Solar has to face cut-throat competition from domestic peers. The fierce competition between Chinese solar companies often hurts the business margins. Meanwhile, high product costs continue to impact the stock and are expected to hamper second-quarter results as well.

Moreover, the Zacks Consensus Estimate for the company’s revenues is pegged at $610 million for the quarter, which reflects a decline of 1.5% on a year-over-year basis. Meanwhile, the same for the bottom line reflects a huge plunge.

Earnings Whispers

Our proven model does not conclusively show that JA Solar will beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here, as you will see below.

Zacks ESP: JA Solar has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a breakeven. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: JA Solar carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult.

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Peer Releases

First Solar Inc. (NASDAQ:FSLR) reported second-quarter 2017 earnings of 64 cents a share. The Zacks Consensus Estimate was pegged at a loss of 4 cents. Furthermore, the company carries a Zacks Rank #3.

Canadian Solar Inc. (NASDAQ:CSIQ) witnessed second-quarter 2017 adjusted loss of 15 cents per share, narrower than the Zacks Consensus Estimate of a loss of 16 cents. Also, this company sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

SunPower Corp. (NASDAQ:SPWR) incurred second-quarter 2017 loss of 39 cents per share, narrower than the Zacks Consensus Estimate of a loss of 63 cents. Moreover, the company holds a Zacks Rank #2.

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